Why Disney Bought One Of YouTube's Largest Networks For $500 Million

Published 10:34 am, Wednesday, May 7, 2014

The deal is the largest so far between a studio and YouTube multi-channel network as Disney could pay up to $950 million if Maker meets certain goals. In comparison, DreamWorks Animation previously purchased AwesomenessTV for $33 million in 2013.

The acquisition gives Disney a strong platform to produce online video content. Maker creates content mostly aimed at millennials and reportedly receives 5.5 billion views per month across all of its channels.

During Tuesday’s Q2 earnings call, CEO Bob Iger commented on what Disney plans to do with multi-channel network (MCN). Iger says Maker will be used for distribution of Disney's lucrative brands like "Star Wars" and Marvel.

"We see it first and foremost as a distribution platform and a very successful one, one that not only can command more eyeballs, more consumption, but with that more advertising revenue or revenue in general. We did not believe that we had the ability in the Company near term to distribute as effectively and to sell as effectively. We also thought they had an expertise from a production and a creative perspective on creating short-form video that we didn't think was as deep as it could've been at Disney. So we bought a lot of different capabilities, but mostly distribution."

"As we look at it, we believe that by creating access for the Maker people to some of our big brands and characters and storytelling — Star Wars would be a perfect example of that, Marvel, another one — that we can actually allow the Maker people to substantially improve the distribution or the reach of short-form video using these characters and stories, but also add their expertise on the production side."

Iger additionally highlighted Maker's access to data and algorithms and that it would take a substantial amount of time for Disney to build that kind of technological expertise to put out potentially successful online videos.

At the least, it sounds like we can plan on seeing many more short-form Marvel and "Star Wars" videos in the near future.